Redalyc.An Analysis of Industrial Districts and Triple Helix Of

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Amaral, Marcelo; Lima, Raphael; da Silva Motta, Gustavo; Fagundes, Mariana; Schocair, Marília An analysis of industrial districts and Triple Helix of innovation–are gional development experience in the south of the state of Rio de Janeiro RAI - Revista de Administração e Inovação, vol. 14, núm. 4, 2017, pp. 280-289 Universidade de São Paulo São Paulo, Brasil

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RAI Revista de Administração e Inovação 14 (2017) 280–289 http://www.rai-imr.com.br/pt/

An analysis of industrial districts and Triple Helix of innovation–aregional development experience in the south of the state of Rio de Janeiro Marcelo Amaral ∗, Raphael Lima, Gustavo da Silva Motta, Mariana Fagundes, Marília Schocair Universidade Federal Fluminense, Volta Redonda, Rio de Janeiro, RJ, Brazil Received 27 September 2016; accepted 27 July 2017 Available online 30 August 2017 Scientiﬁc Editor: Felipe Borini

Abstract This work consolidates a research effort to analyze 70 years of economic development in the region of the Paraíba do Sul River, in the south of the state of Rio de Janeiro, Brazil. The paper follows the trajectory of the leader company, steelmaker Companhia Siderúrgica National, and its relations with other local actors, such as government and universities. The research question investigates if the steel market is still the company’s core business and its evolution in the competitive global production network. This work introduces a different exploratory approach, analyzing productive networks using an industrial district typology and the linkages based on the Triple Helix of university–industry–government. The literature review and case study show the first transition, after the privatization process in the nineties, transforming a state-owned company with a focus in the national market into a transnational corporation with business on four continents. The second transition, from the steel market to a globally integrated production chain of mining and steel is underway. The region’s configuration migrated from a company town in a state- centered model to a central-radial arrangement. The second migration to a satellite platform is in progress. Regarding technology development, the company’s strategy changed from in-house research and development to buying technology. There is a recent effort to recreate interaction space with universities. © 2017 Departamento de Administraçao,˜ Faculdade de Economia, Administraçao˜ e Contabilidade da Universidade de Sao˜ Paulo – FEA/USP. Published by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

Keywords: CSN; Privatization; Regional economic development; Innovation management; Triple Helix; Production networks

Introduction The decision to build the mill in the region was related to its equidistance from the leading consumer centers in the country Companhia Siderúrgica National (CSN) was incorporated by (Rio de Janeiro and São Paulo), concentrating half of Brazil’s the Brazilian government during the Second World War as a GDP. Volta Redonda was a living laboratory from the Vargas symbol of the country’s industrialization process in the twenti- period (1930–1945), where the government experimented with eth century. Founded on April 9, 1941 by a decree of Brazilian theories about driving the country’s economic development. dictator Getúlio Vargas, CSN started its operations on October The company, over the past 70 years, has attracted many 1, 1946, at a site bordering the Paraíba do Sul River in the cur- suppliers and service providers to the region. Comprehensive rent city of Volta Redonda, in the south of the state of Rio de services and educational sectors have been developed to provide Janeiro. Initially, the company produced coke, cast pig iron, and trained people and expertise. These create a dynamic of regional long products (Bedê, 2004; Lima, 2010). development (Lima, 2010). The privatization process in the nineties and the new private management redirected the company’s strategy and reconfigured the set of relationships along ∗ Corresponding author. the production chains (Santos, 2010; Lima, 2010; Fagundes, E-mail: [email protected] (M. Amaral). Garcia, Motta, & Armond-de-Melo, 2014; Fagundes, Ferreira, Motta, & Leal Junior, 2016). Some works have identified a loss Peer Review under the responsibility of Departamento de Administração, Faculdade de Economia, Administração e Contabilidade da Universidade de in the regional development dynamic (Ferreira, 2012; Monteiro São Paulo – FEA/USP. & Lima, 2015). Others have indicated the maturing process of http://dx.doi.org/10.1016/j.rai.2017.07.005 1809-2039/© 2017 Departamento de Administraçao,˜ Faculdade de Economia, Administraçao˜ e Contabilidade da Universidade de Sao˜ Paulo – FEA/USP. Published by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 281

Brazilian capitalism and the transformation of CSN into a global Global production networks are complex structures with player (Amaral, Motta, Lima, Fagundes, & Schocair, 2016). various links that form multidimensional multilayered lattices. Thus, the object of this paper is to analyze the economic Networks benefit from ICTs and advances in logistics sys- development of the Middle Paraíba do Sul Valley Region (MPR- tems to strengthen time/space relations on global, national and RJ, an abbreviation created by Ferreira, 2012). There are many regional/local scales. It can happen dependently or indepen- ways to do that, but it was choosen discuss the trajectory of the dently one from another (Dicken, 2011). The organizational key company. Other works have made a similar effort, looking at challenge is how to remain competitive in a business envi- the region (Amaral, Ferreira, & Teodoro, 2011; Ferreira, 2012; ronment influenced by the internationalization of information, Lima, 2010) and aspects of CSN’s trajectory (Amaral et al., products and services while also improving the workforce and 2016; Bedê, 2004; Fagundes et al., 2014, 2016; Santos, 2010). focusing on profitable investments (Lima, 2010). This work introduces a different approach, analyzing productive The developed economies are places where the phenomenon networks (Markusen, 1988, 1995) and Triple Helix (3H) link- of intensified competitiveness can be better observed because ages (Etzkowitz & Leydesdorff, 2000) and discussing innovation labor is relatively scarce and expensive (low birth rates com- and competitiveness. The analysis of the period helps under- bined with high skills), generating high productivity (Porter, stand the dynamics of development through the relationship with 1998). Regarding developing economies, recently recognized as stakeholders’spheres of academia, industry and government, and world powers, they have different competitive levels. They have their effort to compete in the international arena. a large low-cost workforce with reasonable qualifications that is The original research question was to understand if the steel relatively idle. The contrast in productivity and costs between business is still the core business of CSN and what the company’s economies and regions are key factors that attract and maintain position is in the global production network and steel market. companies in emerging countries. It is relatively easy to find This question is relevant per se and leads to investigation of the places to build industrial plants with government subsidies and company’s and region’s evolution over time. The second part of lower operating costs. This scenario is part of the trend for mobil- the study is related to CSN’s efforts in research and development ity of businesses and investments from developed economies to (R&D), as a way to break with technology dependence in an emerging ones (Markusen, 1995). emerging country and be competitive on the global stage. A particular challenge to the companies created or relocated This work does not have a specific hypothesis or assump- to emerging regions is how to stay competitive. With improve- tion. Insead, it provides a general overview of the company’s ment of local productivity and income, there is a consequent trajectory, based on exploratory research approach supported by increase in costs, which creates a risk of capital migration to theories such as networks of production and 3H. The paper has new emerging regions. As an alternative, national and subna- seven parts: introduction, literature review, a brief presentation tional governments are investing in the concept of improving of CSN’s trajectory, statements of people from the university the “local climate for investment”, causing economists, busi- and government in the region, discussion, and final comments. ness people, geographers and planners to seek alternatives to increase attractiveness. Theoretical basis These trends attract the attention of researchers to the field of “regional economic development”. Researchers from sociology, This item presents concepts to analyze the company’s and economics, geography and history have proposed several firm region’s trajectory. agglomeration concepts, such as Marshallian Districts, or its Italian variant (Becattini, 2002) or American variant (Saxenian, Production networks, industrial districts, and regional 2006); industrial clusters (Porter, 1998); and local productive economic development arrangements or local productive and innovative arrangements and systems (Lastres & Cassiolato, 2005). One relevant con- The international integration in the nineteenth century can cept is the industrial district (Becattini, Bellandi, & De Propris, be considered superficial, based on transactions by indepen- 2011), defined as “...an area spatially delimited, with a new dent companies. In the twentieth century, accelerated integration direction of economic activity and export specialization defined, through transactional production networks, distributed in com- it can be related to the natural resource base or certain types of plex geographic areas (Dicken, 2011). More than that, in the industry or services” (Markusen, 1995, p. 1). This author also past 35 years, a new techno-economic paradigm has emerged proposed a typology, summarized in Table 1, to analyze the in the industrialized economies due to the enhancement of the phenomenon. knowledge base, particularly the diffusion of information and A company town can be considered a particular case of an communication technologies (ICT) (Harvey, 1992). industrial district. It is a “mini-city” with a set of community The relations of production undergo constant change, caused facilities like houses, buildings, schools, hospitals and recre- by cultural, environmental, political and social influences. These ational areas, in short, a closed urban nucleus belonging to a changes create a climate of uncertainty for producers, govern- company, which exercises control of people’s inflows and out- ments, and consumers. The impact on the business environment flows. These phenomena first appeared in Europe and the USA is the search for strategies to sustain business in an increasingly starting in the late nineteenth century, following the growth competitive, comprehensive and demanding market (Dicken, of production scales in modern capitalism, with concentration 2011). of capital and labor. These resulted in reconstruction of urban 282 M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289

Table 1 Table 2 Typology of industrial districts. UIG linkage configuration. Types Concept 3H1 U and I spheres are both dominated by the G sphere regarding strategies and Marshallian Related to a region with a set of companies decision-making processes, like former with small production scales, local capital, socialist states and totalitarian/military and local scope of operations, forming a vast governments. web of relationships between them. There is 3H2 Each actor plays its role alone (laissez-faire), a range of specialized services that make this with well-defined boundaries and low agglomeration competitive interaction. nationally/internationally. It includes issues 3H3 An overlap occurs between each sphere; the like trust, cooperation among actors, and the interrelationships deepens in quantity, formation of local culture as elements of quality and complexity, resulting in the firms’ aggregation. creation of hybrid organizations from these Central-radial (hub and Comprised of companies whose sphere of interfaces. spoke) action is regional (sometimes national) and that act through a key firm or economic axis, Source: Developed by the authors based on Etzkowitz and Leydesdorff (2000). bringing suppliers and related activities. It exhibits a strong network (where small businesses are highly dependent). and accepted (Fagerberg, Srholec, & Verspagen, 2009). At this Industrial platform satellite It is a result of transnational firms’ strategies process, there are ways of protecting technological develop- to seek locations outside of urban centers to ment, such as the registration with official agencies (patents, produce, looking for low production costs. They use economies of scale but do not trademarks and brands) or the general protection afforded to create a supply chain due to the industrial/commercial secrets. By choosing to file a patent appli- heterogeneity of the products. Firms do not cation, a company seeks to protect its inventions, keeping congregate together. They can be found in competitors from taking advantage of the R&D efforts (OECD, every country independently of the economic 2005). development level. There is an absence of connections and transactions with the region. There are several motivations for patenting, such as strength- State-centered Organized around some public entity, like a ened placement in the market to obtain investment return, legal military base, university, R&D center, protection against counterfeiters, the possibility of selling or technology park, state-owned enterprise, or licensing the invention, and an incentive for competition and the concentration of state agencies, among development of new technologies. Thus, patent data are useful others. It tends to have a configuration close to a central-radial district where the leader indicators of R&D efforts (Fagundes et al., 2014, 2016). organization is a major employer and defines Another way to analyze innovation efforts is to study the the territorial organization. networks created. The Triple Helix (3H) approach indicates that Source: Developed by the authors based on Markusen (1988, 1995). the proximity/intensity of linkages between knowledge producers (university and R&D centers: U), knowledge users (industry: I), and economic and social regulators (government: G) are crit- phenomena through denial of existing structures and creating ical to improving the conditions that favor innovation. In the new ones, through efforts and goals for economic viability of 3H framework, the academia is raised to a similar position as the projects to which they are linked. This helps to understand industry and government, as a triad of institutional spheres with why most “company towns” were initially viewed as associated similar and overlapping activities. The new role of academia with economic progress and modernity. Some authors have occurs due to the growing importance of new knowledge creation studied the subject in the USA (Serbin, 1993 as cited in Lima, in the current economy, which has brought a new mission to the U 2010). It is possible to find examples in Brazil. Some are (“the second academic revolution”). This new role integrates the known for eccentricity, ambition and failure (Fordlandia and missions of education and research, assuming that universities Jari Project), while others have been successful (Carajás and will have an entrepreneurial attitude, incorporating economic Volta Redonda) (Santos, 2010). development to their academic goals (Etzkowitz, 2008). The early literature on regional development has focused on In recent years, some Brazilian universities have been assum- analyzing the phenomena and supporting economic developing new roles, helping to put knowledge into action by estab- ment policies. It deals with competitiveness, by analyzing the lishing organizational mechanisms of knowledge/technology production factors and production scales. More contemporary transfer and performing a strategic role in economic develop- literature introduces the innovation concept in the scene as a ment (Etzkowitz, Mello, & Almeida, 2005). So, the 3H approach way to promote competitiveness in local spaces. is also useful to explain/promote regional development, not only by analyzing the production factors available but also the rela- R&D and innovation: efforts, management and linkages tionships between the actors. The U–I–G linkages can take many configurations or stages, as seen in Table 2. Most companies make investments in R&D as a way of The 3H3 configuration gives rise to so-called hybrid and achieving competitive advantage (Porter, 1998). The direct influ- consensus spaces. Regional economic development entities, ence of innovation on economic development is also known like science and technology parks, are common results of the M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 283

Table 3 Symbol of Brazilian development (1945–1980) U-I types of collaboration. Education and training The basid role of U is to contribute to human From CSN’s creation, as a result of the Brazil–US agree- capital and workforce development. ment during World War II, until the seventies, CSN promoted Codified knowledge The U’s R&D contributes to the increase of two expansion programs to increase production capacity. The codified knowledge, including publications, first one, completed in 1974, reached capacity of 1.6 million patents, software, and hardware. Technical assistance The collaboration involves solving metric tons of crude steel per year and expanded the line of scientific/technological problems to support products. The second cycle was finalized in 1977 when produc- the creation/development of new ventures tion capacity reached 2.4 million tons of crude steel (Bedê, 2004; and perform collaborative R&D with local Lima, 2013; Morel, 1989). The company emerged as the largest companies, among otherd. steel mill in Latin America and one of the pillars of Brazilian Space of debate The U is an open space for an ongoing discussion about the development of economic development, since steel is essential to other indus- industry, new technologies, and market tries like automobiles, civil construction, shipbuilding and home opportunities. appliances. Source: Developed by the authors based on Lester (2005). The company’s decisions and investments were defined by the Ministry of Mines and Energy as part of the development plans by the federal government. In the seventies, CSN established an linkages at this stage (Amaral et al., 2011). The actors remain R&D center to learn how to use foreign technology and develop independent but have strong ties, engendering multifaceted new solutions. Lines of more developed products (tinplated and social networks that determine new ways of working. Academia specialized steels) were created (Lima, 2010). adopts a more business-like behavior (entrepreneurial), licens- In 1954, VoltaRedonda became a separate municipality (split ing patents or creating mechanisms and structures to support the off from Barra Mansa), and the city was considered a national creation of technology-based companies from their laboratories security area by the military government starting in the mid- and graduate programs. Firms internalize some activities sixties. American engineers helped to design a planned city with similar to the academic context, such as knowledge sharing and neighborhoods for workers, engineers, and managers (Bedê, employee training (Etzkowitz & Leydesdorff, 2000). Regarding 2004; Morel, 1989; Santos, 2010). the U–I interactions, there are four categories, as seen in Table 3, that contribute to increasing collaboration, enhancing Crisis and privatization (1980–1994) the innovation processes and promoting economic development. This was a challenging period marked by labor strikes, high Research method inflation, political instability and economic shocks. In the political sphere, the position became dominant that the state should This study is exploratory and descriptive. An extensive liter- withdraw from economic activities, leaving only its core func- ature review was conducted, as briefly presented in “theoretical tions, a Neoliberal vision called the Minimum State. This change basis” section. Regarding the technical procedure, this is a case process created a movement toward trade and financial openness, study about a company that personifies regional development. accelerating economic restructuring and internationalization of CSN’s trajectory is well documented (“CSN’s trajectory” sec- production (Diniz & Crocco, 2006; Ferreira, 2012). In the same tion), but the other actors are less studied (“the region and local period, the developed economies experienced a process of indus- actors” section). The case study joins results from three comple- trial restructuring and globalization of production chains, in mentary research initiatives, performed in the last ten years by contrast to the Fordist paradigm (Harvey, 1992). academics in the region (Fagundes et al., 2014, 2016; Ferreira, CSN completed the third upgrade in the plant in 1989, reach- 2012; Lima, 2010, 2013). These research efforts include sec- ing 4.5 million tons of crude steel produced per year. The ondary sources (reports/documents, papers/dissertations/theses, company reorganized the plant to conform to the new produc- and books) and interviews (with CSN’s current and former tion scales (CSN, 1990). However, the company lost money and employees and managers; civil servants; businesspeople; among was considered a problem for the Brazilian Treasury. The new others). For this study, the authors had access to the tran- democratic regime (“Nova República”) after the period of mili- scriptions of previous interviews and performed new ones tary rule (1964–1985) even considered closing CSN because the to complement the panorama about other organizations and expenses were excessive and the profits were low (Lima, 2010). allow/discuss the analyses (“Discussion” section). Instead, it was privatized in 1993 after a restructura- tion process. The new controlling group was composed of CSN’s trajectory Grupo Vicunha, a Brazilian textile holding company, Banco Bamerindus (later HSBC, now Bradesco), Banco Bradesco and This item presents CSN’s trajectory in four parts. A fifth part Vale (former state-owned Companhia Vale do Rio Doce) (CSN, was included to discuss technology development. Themes like 1994; Lima, 2010). labor relations or relationships between the company and social From 1945 to 1994, the trajectory of CSN and VoltaRedonda entities will not be treated here due to space and focus [see Lima was tighthly bound, in a company town arrangement. The com- (2010) and Monteiro and Lima (2015) for specific literature]. pany was the central leverage of development, providing benefits 284 M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 to employees, controlling labor relations, and having central of technological development, such as patents (Fagundes et al., influence on the city’s formation and regional development 2016). (Lima, 2010). Global player (2002–2016)

The end of the “company town” (1994–2002) CSN currently has capacity to produce 5 million tons of crude steel yearly. The company reduced the number of direct The new private company suffered from the lack of experi- employees to just over 8500 in 2005, as the result of automa- ence in the steel business of the new owners and several conflicts tion processes and implementation of integrated management between the stakeholders (owners, labor union, and local gov- systems, leading to rethinking the whole productive process. ernment). An extensive revision of the company’s strategy led In 2008, the production of crude steel reached 5.8 million to a rupture with the city. CSN as a state-owned company had tons, and CSN had a record profit (US$ 2.8 billion) as a result a bloated organizational structure with inefficiencies and vices. of investments made to grow horizontally by incorporating pro- In 1993, it had nearly 40,000 direct and outsourced employees. duction chains that have a connection with steel, such as mining The company reduced the workforce to just over 20,000 in the and logistics (railroads and ports) (CSN, 2009). From 1994 to following years. It closed some inefficient subsidiaries and rene- 2008, productivity per employee increased 600% (Amaral et al., gotiated or canceled contracts with suppliers. The effect was a 2016). crisis in the city of Volta Redonda, with increasing bankruptcies Since 2000, CSN’s strategy has clearly changed, redirecting of businesses and other effects (Lima, 2010). the business model to make the company a global competi- During eight years, until 2002, there was an extensive pro- tor. To implement this, CSN made several investments. First, cess of rethinking the company and modernize it in technical it bought equity stakes in several companies in Brazil, like MRS and managerial aspects. Initially, the private owners assumed (logistic), Light (electricity), Sepetiba Tecon (port), Usiminas the management and carried out economic restructuring. Since (steel). It also expanded internationally, by acquiring holdings the new private owners had little knowledge of the steel business, in steel companies in the USA, Portugal and Germany. Second, the results were not the best ones, and in sequence, a group of CSN implemented a SAP’s enterprise resource planning soft- careers employees occupied high-level management positions. ware (ERP) and other tools to enhance the production control However, they kept the same practices of the state-controlled process. Third, the company executed a technological upgrade company. The owners then hired a team of professional man- of existing plants. Finally, the entrance in new market niches agers, led by the economist Maria Silvia Bastos Marques as increasing the added value of steel (e.g., the creation of Galva- CEO, to manage the company from 1996 to 2002. During this sud to deliver stamped steel ready for the automotive industry). period, as a result of capital unwinding between CSN and Valein These investments means CSN is now engaged in five productive 2000, control was centralized in Benjamin Steinbruch, head of chains (steel, mining, logistics, cement, and energy), all of them Grupo Vicunha (the major shareholder), who had been chairman to increase the power in the steel chain and to internationalize, of CSN’s board of directors since 1993 (CSN, 2003). to overcome foreign market barriers. Along the years, technological modernization efforts were This integration combined with a more efficient management practiced at CSN (see section “technology development”). process has made the company in one of the lowest-cost steel Several factors allowed the implementation of the new man- producers in the world and one Brazilian firms. It leads several agement and organizational structure, facilitating the integration segments in the Brazilian steel market. Its production of iron ore of knowledge between units. This included provision of inter- has increased at astonishing rates year after year. The overall goal nal/external training and hiring of professionals from abroad, is to combine domestic and international sales, contributing to and partnerships with suppliers (to improve processes) and cus- the maintenance of market shares. tomers (for the development of new steel specifications). The The company has logistics structure (ports and railways) participation of the workforce in problem solving was also for production outflow. New investments (US$ 4 billion in increased, such as the organization of groups to address anoma- 2013–2014) were made to expand logistics capacity and power lies and standardization. Finally, projects were started with generation (CSN, 2015). CSN also takes waste from steel pro- universities, led by the R&D center, to acquire new knowl- duction to a cement plant as part of its cost reduction strategy edge and increase the variety of specifications, such as steel throgh synergy. This strategy has resulted in the horizontal for electrical purposes, the automobile industry and two-piece growth of the corporation (Amaral et al., 2016). The steel busi- cans (Fagundes et al., 2014, 2016). ness corresponds to 50% of the gross revenues, but mining has These learning mechanisms provided technical knowledge to a higher profit margin (CSN, 2016). CSN. Due to the increased range of specifications required by Currently, CSN is a publicly held holding company, with 40 customers, the knowledge flow now occurs more dynamically, percent of its shares traded on the BM&F/Bovespa (São Paulo) allowing the migration of knowledge from people of different and NYSE (New York). Since 2014, CSN has been affected areas. All these efforts reduced costs and increased the flexibility by excess steel capacity in the world and the political and eco- of new products made through new processes. This process was nomic crisis in Brazil. The demand for steel (from the internal driven by the need to enhance competitiveness. However, this market) and iron ore (from China) has fallen and affected the improvement process was not reflected in the output indicators financial structure of the company. In mid-2015, CSN sold some M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 285

0 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fig. 1. Patent applications Source: Fagundes et al. (2014). complementary assets (like the ports) to stop the drain on cash ber is relatively small compared to the total number of filings flow. (336). In the analyses of the collaboration networks for technol- Technology development ogy development, 29 nodes were found, which involve CSN, its controlled companies, and 26 other organizations. The network’s A study of CSN’s patent data, using the FAMPAT database density is 24%, and it has few nodes and few links between these and Questel Orbit and Vantage Point programs, analyzed 336 nodes, showing that technological development in the company applications filed from 1971 to 2009 (the most recent data avail- has little external influence (Fagundes et al., 2014). able, presented in Fig. 1). CSN filed 274 of these and controlled From 1982 to 2009, CSN applied for 335 patents or util- companies filed 62. The average of applications filed from 1980 ity models, but this process was not linear. During this period to 1995 was 16.5 per year, whereas in the period from 1996 to it underwent several organizational changes that undermined 2009 the numer was 5.07 (Fagundes et al., 2016). The privati- the capacity for intellectual property management. The National zation and changes in the technological development strategy Industrial Property Institute (the Brazilian patent and trademark influenced that reduction. The privatized company may have office) granted only 93 patents (28%). Only 11 of them were the chosen to keep its trade secrets and buy technology already result of external collaboration, with four firms and four univer- embedded in equipment and systems. Another reason for this sities (Bazzo, 2010). This means that CSN seeks to develop its decrease was the budget shortage allocated to R&D projects. technological capacities in a “closed innovation” paradigm. The field with the most patent applications was materials (88 Since 2002, the network of cooperation has decreased in applications), which were constant from 1971 to 2009. size, increased in density, and the network has continued to be Table 4 shows the relations between CSN and other organi- under the company’s influence/control. The number of partner- zations in technological development. As seen, 12 universities ships and the number patent applications has also decreased. have filed 56 patent applications together with CSN. This num- This scenario has two opposite perspectives. On one hand, CSN demonstrates a weakening of the internal innovative Table 4 environment, by not having a context for learning/sharing Partners. knowledge/technology with external sources. On the other hand, Organization Status Filings Organization Status Filings this can reflect a change in the pattern of technological choices, demonstrating that the company has become more careful in CSN Company 274 UNIFEI University 2 selecting technologies (Bazzo, 2010). PRADA Subsidiary 61 UNIFRAX Company 2 UFF University 14 UTFPR University 2 UFSCAR University 11 COBRAPI Company 1 The region and local actors UNIFOA University 8 CONNECT Company 1 UFRN University 7 DELTA Company 1 The MPR-RJ’s history is rich in events involving the rise, ETPC Technical school 4 FIBRAFORM Company 1 decline, resilience, and reinvention of the economy. In the twen- USP University 4 FILSAN Company 1 tieth century, the region faced a decline in coffee growing, but VCIBRASIL Company 4 INAL Subsidiary 1 IPT Research institute 3 PLANEPAR Company 1 recovered with the establishment of CSN in the 1940s. From PARQTEC Research institute 3 STRAINLAB Company 1 then, the local economy generally grew until the mid-1990s, UFMA University 3 UBM University 1 when privatization of CSN unleashed a period of economic cri- IFSC University 2 UFMG University 1 sis in the region. However, it was not long before the region UFPB University 2 USS University 1 returned to economic growth through new investments, particu- UFS University 2 larly in the automotive sector, and the revitalization of CSN as Source: Fagundes et al. (2014). a private company (Ferreira, 2012). 286 M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289

According to the latest census data, the region has 855,643 1961 to train engineers for CSN. Currently, UFF-PUVR has two inhabitants divided into 12 cities, and highway and train connec- campuses in the city and fourteen undergraduate courses, six tions to São Paulo and Minas Gerais cross the area. In addition master’s degree programs, a doctoral program (in metallurgical to CSN, MPR-RJ has a large number of industries in different engineering) and several extension and specialization courses. segments, such as MAN Latin America, PSA Peugeot Citroën, The pole has a faculty of 250 members who serve 8000 students. Saint-Gobain Pipelines, Votorantim Steel, Galvasud, Michelin, From 1961 to 1994, CSN was the key partner of UFF-PUVR, Metalurgica Barra do Pirai, AMBEV, P&G, Du Pont, Hyundai hiring graduates, encouraging its engineers to become teachers, Heavy Industries, Nissan, Jaguar Land Rover and BR Metals. and financing graduate courses in Brazil and abroad. Further- Moreover, the region has many small and midsized companies more, the company invested heavily in laboratory construction in the metal-mechanical area (Amaral et al., 2016). and equipment purchase. These installations allowed the provi- Structural change occurred in the 1990s in the sub-regions sion of technical services and execution of R&D projects aimed of MPR-RJ. While Volta Redonda and its surroundings suffered at solving technical problems. In parallel, CSN established an the consequences of CSN’s privatization, the cities of Resende, R&D center, near factory and one of the UFF-PUVR campuses, Itatiaia and Porto Real (RIP) initiated a new cycle of industri- to act in a complementary way in relationships with other insti- alization, with the installation of automotive plants. In contrast tutions, and incorporate the technical and scientific knowledge to what occurred in Volta Redonda, this region began a new generated by the university. The relationship is quite atypical, cycle of industrial development, with the arrival of Volkswagen perhaps one of the few recorded cases of reverse spin-off where in 1996 (currently MAN Latin America) and PSA Peugeot Cit- the company originates a university. CSN also established a roën in 2001. A second cycle started in 2013 with the opening technical school to prepare workers (Amaral et al., 2016). of plants owned by Hyundai (2013), Nissan (2015), and Jaguar This relationship has changed since privatization. The linkage Land Rover (2016). remains with a focus on education. Several of UFF’s professors From 2002 to 2014, due to the economic development experi- are former CSN engineers and managers. However, the formal enced by Brazil, a set of investments from large industries began partnership in R&D ended. Only in 2015 a new R&D agreement in the MPR-RJ, such as CSN’s cement factory, opened in 2009, was signed (Amaral et al., 2016). and a flat steel plant, started in 2015, both in Volta Redonda. The Universidade Estadual do Rio de Janeiro (UERJ) cre- Another flat steel plant was built by Votorantim in the city of ated the Campus Regional do Médio Paraiba (CRMP) in 1992 Resende, starting production in 2009. Because of its location after mobilization of the municipal government for its establish- and infrastructure, the region has also attracted investments in ment in the city of Resende. The purpose of establishing this logistics from companies like DHL (Itatiaia), Droga Raia (Barra campus was to provide a skilled workforce and also to attract Mansa), 3Corp Technology (Resende), and Fast Broker (Volta companies to the region. Currently, UERJ has about 1000 stu- Redonda). dents enrolled in four undergraduate courses. The UERJ/CRMP campus is close to the automakers’ plants, and the land avail- The industry organizations able attracted these companies to develop service facilities and collaborative R&D projects. MAN Latin America and Peugeot The Federation of Industries of Rio de Janeiro (FIRJAN), a Citroën signed R&D agreements with UERJ in 2011 and 2012. group of business associations, is the key representative entity. Qualification of people is the main focus of these public uni- It has a regional branch and supports industry with several versities. Innovation is not a reality yet. The challenge is to training units operated in collaboration with the National Indus- extend this relationship established to R&D projects and busi- trial Apprenticeship Service. The most representative business ness development. association is Metalsul, which congregates 130 metal-mechanic companies (including CSN) and leads a local productive The local governments arrangement project. It promotes an annual business fair and training activities through a local productive arrangement Ferreira (2012) mapped the relationship between local (Ferreira, 2012). authorities and its role in the economic development of the In 2013, the car manufacturers also tried to create a gov- region. Interviews were conducted with the secretaries of eco- ernance mechanism in RIP through an automotive cluster nomic development of the four biggest cities (Barra Mansa, involving suppliers, FIRJAN and universities, but its role is not Itatiaia, Resende and VoltaRedonda) to collect their perceptions clear or consolidated yet. about the economic structure of these municipalities, incentives for innovation, university–industry interaction activities, and the The role of universities coordination between then. The most relevant observation was the efficiency of the There are two public universities in the MPR-RJ, as well as municipal governments to reach their economic development some private ones, but the public universities are responsible goals. The cities’ strategies aim to attract investment from abroad for the most of the R&D and outreach in Brazil. The oldest to the region. In recent years, several projects have been imple- one is the current Pólo Universitário de Volta Redonda (UFF- mented (as already commented). Another action performed by PUVR), part of Universidade Federal Fluminense, which has all municipal governments is to improve the workforce skills, its origins in a school of metallurgical engineering, created in with an emphasis on operational and mid-level positions. M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 287

In Volta Redonda, the biggest and wealthiest city, economic possible to argue also that Volta Redonda never ceased to be a development issues are limited by the lack of flat land. Most company town. CSN is still the key emplower and taxpayer, and available areas are concentrated in the hands of a few owners, has control over most of the land in the city (Lima, 2013). such as CSN. Although the government is the largest employer, One factor that influences the phenomenon is the need and with about 13,000 people, CSN is the economic engine, with propensity for companies to train, empower, and invest in occu- the highest payroll, and contributes nearly 50% of the city’s tax pations/activities of interest. This orients the relationship with revenue. local/regional governments, whose discussions are limited to the There is evident awareness about the importance of articu- maintenance of the company’s interests (to remain attractive), lation between municipal governments to promote the regional such as availability of trained workers or space/land to receive development, but the practical actions do not reflect that. The suppliers and clients, or highways in satisfactory conditions to main challenge seems to be the inability to promote inte- distribute products. In the long-term, the central-radial districts grated regional development. The intra-regional collaboration have a high dependence on the key companies to maintain the processes involve a complex web of themes and interests, not investment capacity. It takes an effort to establish recycling and always convergent. An organization to mediate this process is innovation that keeps companies with mature activities compet- not easy to find, but the local players can build one, including the itive and also preserves profitability. In general, high wages and universities, which can be key actors in this process (Ferreira, equal income distribution characterize regions in which such 2012). ventures flourish (Markusen, 1995). As a state-owned company, CSN helped to create the cul- Discussion ture of the city, nicknamed “The Steel Town”. This cultural phenomenon remains today and suggests the idea of an orphan This item contains two complementary analyses, one from company town or a business divorced from society. the viewpoint of production networks and the other addressing Regarding the UIG linkages, it is reasonable to classify the the university–industry–government (UIG) relationship. 1945–1993 period as 3H1, where the government encompassed In the first case, it is possible to comprehend the changes in the other spheres and defined the objectives of the actors. In this the global steel production chain, shifting the focus from a mere case, it was a kind of “state” 3H, where the federal government comparison between models of state, national and transnational created and owned the company and the university, and then enterprises to observe the organization of a global network. the company managed the local relations, participating in the In the process of CSN’s constitution and development, for- four collaboration categories proposed by Lester (2005). After mal and informal networks were shaped in the MPR-RJ. The privatization, the relationship became distant, like a 3H2. Sev- company attracted suppliers to surrounding areas, making a eral confluence areas between the three spheres were disrupted significant portion of purchases in the region and generating and renegotiated. The local university lost its primacy and CSN economic and social development. The workforce was mainly constituted new UI bilateral relations outside the MPR-RJ. trained locally at all levels. Since 2005, the local university has gone through a process of After privatization in 1994, there was a review of workforce creating a new dynamic, occupying new spaces and remaining needs and local sourcing of inputs. In the ensuing years, CSN let relevant in the MPR-RJ, as an entrepreneurial university. In this go of two-thirds of the workers. Procurement, previously con- process, new linkages are being created, such as where the gov- centrated in local suppliers, was redirected to global suppliers. ernment acts to plan regional economic development and to The result for the MPR-RJ was a break in the pace of economic qualify workforce for the new economic cycles based on the con- development during the nineties. However, the new millennium figuration of the satellite platform and services industry (Amaral has been marked by a revival of the city of Volta Redonda, et al., 2016). This configuration creates demand for the univer- fostered by civil construction and services (medical and higher sity (supporting the transfer of industries) but also limitations education sectors), less dependent on the company (Lima, 2013). (in general, transnational groups bring technology from their From a business standpoint, CSN formed new networks. The parent companies). Thus, there are opportunities for small local previous state-owned company with focus on the domestic mar- adjustments, not generating the endogenous capacity to inno- ket becomes a competitive global player with business in four vate, perpetuating the needs of capital and technology (Lester, continents. Since 2002, CSN has purchased companies abroad 2005). and expanded its business into mining, cement and production The interest of the company in the university is scattered, of special steels (Amaral et al., 2016). There has been a strategic maintaining contractual relations with various actors to solve change in CSN’s profile and economic geography. specific problems, without fidelity to a region, as in Lester’s Based on Markusen’s typology of industrial districts, it is education and training and technical assistance categories. The possible to suggest that after privatization the company migrated current production model is capital intensive, with a high level from state-centered to a central-radial configuration. In the last of firm concentration. The manufacturing process technology decade, there are signs of a new migration to a form that looks is mature, and CSN now searches only for incremental inno- like an industrial platform satellite. Volta Redonda is no longer vation in processes to improving productivity. The expenditure the center of decisions. Currently, CSN is a Brazilian transna- on technology development is small and concentrated in pur- tional corporation headquartered in São Paulo, and the MPR-RJ chasing equipment and searching for new market applications is just a productive locus (Amaral et al., 2016). However, it is and niches. In 2015, CSN and UFF signed a new agreement for 288 M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289

1945-1993: 3H1 1994-2015: 3H2

state-owned CSN PUVR CRMP Industry FedGov + VR+RIP UFF LocalGov I + FIRJAN FedGov. CSN

Fig. 2. Triple Helix conﬁgurations Source: Developed by the authors.

PUVR-UFF to provide technical assistance to Volta Redonda’s mentioned, such as analysis of the impact of the Brazilian eco- steel plant (Amaral et al., 2016) (Fig. 2). nomic crisis and the Chinese economic deceleration since 2013 (how it affects CSN and the MPR-RJ), alternative strategies to Final remarks regional development in a knowledge economy, or strategies for companies’ and regions’ insertion in a global value chain. In this article, an analysis about trajectory of economic development in a region in the state of Rio de Janeiro was made. This Conflicts of interest effort was conducted by looking at the leader company and the university–industry–government linkages during 70 years. The The authors declare no conflicts of interest. research method was based on a literature review to support a case study with data from secondary sources (previous stud- Acknowledgments and funding sources ies and CSN documents) and primary sources (interviews) with actors from the three helices. The authors acknowledge CSN by access to documents and This study supports the notion that from the founding date data, and Universidade Federal Fluminense (UFF) for provid- until the eighties, CSN focused all its efforts on integration and ing structure for the development of the field research. This enhancement of the steel production plant. These efforts were work received support from the Fundação Carlos Chagas de necessary to support other industrial segments in the Brazil- Apoio à Pesquisa no Estado do Rio de Janeiro (FAPERJ), ian internal market. In 2000, the company changed its strategy through grants E-26/111.474/2014 and E-26/112.494/2012; and ceased to be strictly domestic and started to have global the Conselho Nacional de Desenvolvimento Científico e Tec- characteristics. CSN invested in acquisitions, modernization of nológico (CNPq), grant 442841/2014-0; and the Coordenadoria production process management, and especially in new market de Aperfeiçoamento de Pessoal de Nïvel Superior (CAPES), segments to increase the added value of steel production. CSN grant 99999.003850/2015-03. None of these funding sources is now a holding company working in five different businesses were involved in the execution of the research activities. (steel, mining, logistics, cement and energy), with international markets. Indeed, it is now one of the largest and most prominent References holding companies in Brazil. The data show the first transition of the company, from Amaral, M., Ferreira, A., & Teodoro, P. (2011). Building an entrepreneurial local/national to a transnational corporation. What is still open university in Brazil: The role and potential of university–industry linkages is the configuration. A new transition from steel to mining is in promoting regional economic development. Industry & Higher Education, underway, but the result is not clear, because of the interdepen- 25, 383–395. dence between the two businesses and the recent economic crisis Amaral, M., Motta, G. S., Lima, R. C., Fagundes, M. C., & Schocair, M. (2016, May). Strategic and innovation management in a post-privatized Brazilian in Brazil. steel company – The CSN’s case. In Paper presented at the 25th Conference In the final analysis, the company has migrated from the of International Association for Management of Technology, Orlando. state-centered model to a central-radial industrial district model. Bazzo, K. C. (2010). Redes de coopera¸cão das multinacionais brasileiras: Um Regarding the university–industry–government linkages, it was mapeamento a partir das patentes Unpublished master’s thesis. Ribeirão found a state-centered arrangement (3H1) and migration to a Preto: Universidade de São Paulo. Becattini, G. (2002). From Marshall’s to the Italian “Industrial Districts”. A laissez-faire configuration (3H2) in the nineties. Recent efforts brief critical reconstruction. In A. Curzio, & M. Fortis (Eds.), Complexity have been made to create interaction spaces (3H3), but they are and industrial clusters (pp. 83–106). Springer. not significant yet. Becattini, G., Bellandi, M., & De Propris, L. (2011). A handbook of industrial This work can be a good starting point for students and districts. Cheltenham, UK, Northampton, USA: Edward Elgar. ISBN 978- researchers due to its compliation of other research about the 1-84720-2673. Bedê, W. A. (2004). Volta Redonda na Era Vargas (1941–1964). VoltaRedonda: MPR-RJ and CSN. It is also relevant to business people, policy- City Hall. makers and academics for discussion of regional development CSN. (1994). Companhia Siderúrgica Nacional (2016, 2015, 2014, 2013, 2012, initiatives. Several possibilities for further research can be 2011, 2010, 2009, 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001, 2000, M. Amaral et al. / RAI Revista de Administração e Inovação 14 (2017) 280–289 289

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